US Treasury rejects Exxon Mobil request to drill in Russia

WASHINGTON (AP) — The Trump administration has rejected a request from Exxon Mobil to waive U.S. sanctions against Russia to allow the company to resume oil drilling around the Black Sea.

Treasury Secretary Steven Mnuchin said Friday in a brief statement that the administration "will not be issuing waivers to U.S. companies, including Exxon, authorizing drilling prohibited by current Russian sanctions."

Exxon said it understood the decision, while suggesting that the outcome will merely help European oil companies operating under less-stringent restrictions.

The decision comes just two days after it was reported that Exxon was seeking a waiver to resume a joint venture with Rosneft, a Russian state-owned oil company. Exxon said it filed the request in 2015.

The disclosure of Exxon's application was criticized in Congress by lawmakers who said the Trump administration should not reduce sanctions after U.S. intelligence agencies concluded that Russia interfered in last year's presidential election. Sen. John McCain, R-Ariz., tweeted of Exxon's request, "Are they crazy?"

Secretary of State Rex Tillerson was Exxon's CEO before joining President Donald Trump's cabinet. While at Exxon, he cultivated close ties with Rosneft and Russian officials including President Vladimir Putin, and he spoke against sanctions that were imposed in 2014 in response to Russia's annexation of the Crimea region of Ukraine.

The sanctions bar U.S. oil companies from transferring to Russia the advanced technology that is used to drill more efficiently offshore and in shale formations. Exxon has said in regulatory filings that the sanctions could lead to losses of up to $1 billion.

An Exxon spokesman said the company's application for a waiver was made to meet contractual obligations under a joint-venture agreement in Russia, "where competitor companies are authorized to undertake such work under European sanctions."

Rosneft officials have said that their joint venture with Italy's Eni S.p.A. plans to begin drilling this year in the Black Sea next to the area where Exxon hoped to drill.

Under Treasury Department rules, ExxonMobil could resubmit its application if it provides additional information the government hadn't reviewed previously.

Irving, Texas-based Exxon has disclosed receiving three waivers from the sanctions during the Obama administration for limited work with Rosneft.

Exxon's critics urged the Treasury Department to block more waivers, which they feared would give new momentum to drilling in the environmentally sensitive Russian Arctic.